Cost of living crisis leaving people vulnerable to pension scams: FCA

The research is supported by retirement income market data which showed that the number of pension plans accessed for the first time in 2021/22 increased by 18% to 705,666 compared to 2020/21.

Preying on money worries and lack of confidence in pension savings to last through retirement, the FCA is warning that scammers are using ‘misdirection’ tactics to con victims.

The FCA surveyed over 1,000 people aged 40 and over with workplace and private pensions to uncover how this could impact them.

The results showed that 44% would take up the offer of a free pension review – a classic distraction tactic. Concerns about having enough money to last throughout their retirement make them vulnerable to the lure of boosting pension returns: 17% of over 65s are still in work simply because they cannot afford to retire on their current pension, and over a third (37%), are not confident they have enough in their pension to last their whole retirement.

Many would also be reassured if a potential scammer getting in touch out of the blue could show them third-party verification – such as a separate individual who can (falsely) vouch for them, (46%) and had positive reviews of their service (31%).

Mark Steward, executive director of enforcement and market oversight at the FCA, said: "Many of us sit in awe watching magicians make things disappear right in front of our eyes, despite us thinking we can see everything going on. Once the trick ends, there are no consequences and we can enjoy the rest of our night. But that doesn’t happen with pension scams.

"The rising cost of living is affecting people at all savings levels, and pension scammers are taking advantage of this. Pension scammers are tricking victims with false promises of a better lifestyle in retirement, more money to support a better life in hard times. Like the magician’s trick, thousands can disappear in seconds, but this time the consequences can be devastating ones."